WHITE HOUSE

Five Ways the White House Is Changing Federally Backed Mortgages

President Obama’s message to spur the economy has changed from “pass this bill” to “we can’t wait.” And mortgage rates are the impatient administration’s first target. Rather than waiting for congressional action to improve the outlook for homeowners, the White House is making it easier to refinance loans backed by the Home Affordable Refinance Program.

Though the executive branch can’t legally reach into the practices of private lenders, here is a look at a list of changes (and nudges) the administration plans to implement beginning on Nov. 15:

Eliminating the ceiling: Currently, borrowers can owe no more than 125 percent of the value on their home to qualify for refinancing under HARP. The new requirements will eliminate that ceiling, but it will take congressional action to blow out the floor that requires borrowers to owe more than 80 percent before they qualify for a refinance. According to Corelogic data and analytics, 4.7 million Americans owe more than 125 percent on their homes.

No-equity requirement: The HARP program began with the intention of making refinancing available to homeowners with little equity. Now, in the effort to widen the program's reach, homeowners with no equity at all will be able to refinance.

No new property appraisal required: To qualify for HARP, borrowers had to undergo an application process that included a home appraisal from the federal authority. Now, in an effort to streamline that process, homeowners can apply for loans on new properties without an appraisal.

Extending the term of the program: When HARP was introduced in 2009, the loans it backed were supposed to be a temporary fix to the mortgage-bubble burst. Now, the program has been extended 18 months so that borrowers can apply for loans through the end of 2013.

Inviting competition: Under the current model, the original lender of a HARP-backed loan holds all the power over its rates because the system is too complicated and risky to invite competition. That’s according to National Economic Council Director Gene Sperling, who calls the plan to waive certain representations and warranties for loan makers the most important of the proposals. Sperling expects the move will make it more appealing for other lenders to jump into the market and challenge the current holders.